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OneClick Business Solutions

Section 8 Compliance Company in India


ANNUAL COMPLIANCES FOR SECTION 8 COMPANIES

Under the Companies Act, 2013, a Section 8 company is a type of NGO registered body. As par the Act, every Section 8 company needs to follow the compliance imposed by Income tax authorities and Registrars of Companies (RoC). If they fail to satisfy the requirements of compliance, it can cause heavy penalties up to Rs 1 lakh in a year. Furthermore, such companies and directors might be blacklisted for a certain time.

SECTION 8 COMPANY

A Section 8 company is made with the purpose to promote arts, commerce, education, sports, social welfare, research and protection of environment of the country. They are authorized to do business and make profit which can be used for the objectives and members cannot be informed about that.

INSTANT COMPLIANCE AFTER INCORPORATION

Appointment of Auditor within 30 Days

A Section 8 company should complete the appointment procedure of the first auditor within 30 days since when the same is incorporated. Thus, annual financial fillings of the company can be performed accurately.

Organize Board of Directors' Meeting within 30 Days

The first Board of Directors' meeting is needed to be organized within 30 days since when the company is incorporated. Afterwards, the Board of Directors should conduct minimum one meeting within every six months.

Annual General Meeting

The first Annual General Meeting of a Section 8 company should be conducted within nine months since when the company's first financial year is closed.

PROCESS OF COMPLIANCES OF SECTION 8 COMPLIANCES

Form ADT-1 -
Notice is to be given followed by appointment of Auditor within 15 days since when he is appointed.

Form DIR 2 –
Consent Form of 2 directors stating that they hold their office within 30 days since when the directors are appointed.

Form MR-1 –
It includes returns for appointment of Managing director who is the manager or chief managerial individual within 60 days since when he is appointed.

REPORTS OF ANNUAL GENERAL MEETINGS

Form AOC-3 -
Photocopy of audited financial statement is to be forwarded to the members of the company before 30 days from the date of the meeting.

Form MGT–15 –
A report on Annual General Meeting needs to be submitted within 30 days since when it is held.

Form AOC- 3 & 4 –
Photocopy of the financial statements, accepted in Annual General Meeting is to be submitted by a Section 8 company within 30 days of the meeting.
MoM or the minutes of the meeting should be recorded within 30 days since when the meeting is completed.

Form MGT-7 -
Annual returns must be filed by Section 8 companies from the 60 days from the date of annual general meeting.

One Click Business Solutions Private Limited completes all the compliance needs of a Section 8 company through our powerful state-of-the-art technology. We have vibrant team to make all necessary paperwork to ensure smooth interaction between our clients and government. At our company, we have complete transparency on each procedure to fix realistic expectations. We have a team of highly experienced advisors to address any query about the tax and compliance procedure for Section 8 Company.

Exemptions under Section 8 companies

No necessities to possess paid up share capital and appoint Company Secretary

Not applicable for the maximum number of Directors

No necessity of Independent Director

Directorship in Section 8 Company is not considered for the maximum number of Directorship of a Director

No need for formation of Nomination & Remuneration Committee and Stakeholder Relationship Committee

Penalties related to Non-compliance

Non-compliance may lead to a penalty with a fine of Rs.25000 to Rs.500000 and/or imprisonment.

Tax compliance

A Section 8 company needs to pay corporate tax as recommended by the Income Tax Act. But, certain income can be claimed by it to be excluded while calculating the total income which is taxable to income tax. Following compliances must be filed for claiming an exemption:

Section 8 companies needs to be registered under Section 12A of Income Tax Act with the Principal Commissioner by using form 10A

It must follow the conditions mentioned under Section 11 to qualify for such exemption

The company is required to be approved under Section 80G through Form 10B

One Click Business Solutions Private Limited completes all the compliance needs of a Section 8 company through our powerful state-of-the-art technology. We have vibrant team to make all necessary paperwork to ensure smooth interaction between our clients and government. At our company, we have complete transparency on each procedure to fix realistic expectations. We have a team of highly experienced advisors to address any query about the tax and compliance procedure for Section 8 Company.

Frequently Asked Questions

Ques: Can a Section 8 company be converted into any other kind of company?

Yes, Section 8 Company must follow the rules prescribed by the Ministry of Corporate Affairs.

Ques: Can Section 8 Company claim complete exemption from tax?

Yes, by satisfying the conditions prescribed by the pertinent provisions under the Income Tax Act, it can claim complete exemption.

Ques: Can shares or debentures be issued by Section 8 company?

Section 8 Company can be registered as a company limited by shares or with or without share capital. Irrespective of the kind of the company, dividends cannot be issued to its members by a Section 8 company.

Ques: What is the penalty for failure to appoint auditor within recommended time?

It is punishable if auditor cannot be appointed and punishment includes a fine of Rs. 25,000 that may extend up to Rs. 5,00,000.

Ques: What is the penalty if non-filing of directors consent form with registrar of companies took place?

If Director's Consent form is not filed then it is punishable with fine up to Rs 50,000 or imprisonment up to six months.

Ques: What happens if annual returns are not filed by me?

If filing of annual returns is not done properly, then it is punishable with a fine of Rs 50,000 which may extend up to Rs 5 Lakh.

Ques: What is the penalty for non-compliance of needs of Annual General Meeting?

If a copy of audited financial statements to the members are not sent before the Annual General Meeting and also failure to record the minutes of the meeting then it is considered punishable with a fine up to Rs 25,000.

If Annual General Meeting is not organized then it is punished with a fine up to Rs 1 Lakh if report on Annual General Meeting is not submitted then it is punishable with a fine of Rs 1 Lakh that may expand to Rs 5 Lakh.

Ques: Under which condition I can claim tax exemption?

Yes, it is a must to incorporate your company with the Commissioner of Income tax to get tax exemption.

Ques: Can tax exemption be availed without registration?

No. If a company is not incorporated with the Commissioner, the same will be imposed tax on par like other companies at 30%.

Ques: Can Section 8 companies collect profit without paying tax?

Yes. It is permitted to collect up to 15% of its total income without payment of tax.





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